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Opportunities Abound for Africa in a Changing World
Wednesday, October 8, 2014

During these times of upheaval and uncertainty, Africa – with some of the world’s fastest growing economies – offers new and innovative approaches to its most significant challenges. The continent possesses vast and largely untapped natural and social resources that present exciting opportunities to investors in a number of important sectors. A number of noteworthy projects appear poised to further expand the boundaries of global connectivity and efficiency.

For example, current estimates by PricewaterhouseCoopers predict double digit growth in Internet spending on access and advertising over the next several years in South Africa alone, with a forecasted market size of approximately $6.3 billion by 2018. With a majority of Internet users throughout Africa reporting regular use of social media websites, according to McKinsey’s African Consumer Insights Center (2011), the potential for online business appears significant. Similarly, rising Internet use and accessibility could even help facilitate advancements in the agriculture and health care sectors despite, perhaps, lagging physical infrastructure on the continent.

In the energy sector, while experts call for action amid the rising uncertainty in energy and climate trends, Ethiopia continues applying foreign investment and long-term vision to expand and diversify its energy production with a view to improving region-wide access to electricity. The country’s plan includes large scale projects in wind, geothermal, and hydro power in addition to increased oil exploration. Similarly, as renewable energy throughout Africa gains widespread attention, existing projects such as the Kakira biomass power plant in Uganda demonstrate novel approaches to addressing gaps in energy infrastructure.

One more example of a groundbreaking development in the continent’s potential to thrive during uncertainty includes the African Union’s African Risk Capacity agency “climate change bonds.” The Extreme Climate Facility will issue catastrophe bonds to private investors, initially totaling more than $100 million, to secure funding for disaster responses to extreme weather events. Investor yields will be funded by aid or donors, with principals returned to investors at maturity if no participating states experience such events requiring payout. These and other initiatives present such some of the innovative opportunities for investment emerging in Africa, and at the very least reveal a continent unafraid to apply new ideas to our times’ greatest challenges.

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